In the case of returns, the cryptocurrency market is possibly the most profitable of any financial sector. It’s also the most dangerous. An enormous payoff comes with a high level of risk. It means that risk management is synonymous with return management. If you can manage long-term risk, HODL is the best option. If you’re new to virtual currency, you may be wondering why it’s referred to as HODL rather than hold. It all started when someone misspelt “hold” in a bitcoin discussion forum, resulting in “hodl.” The cryptocurrency community has grown accustomed to it, coining the phrase “Hold On For Dear Life” to describe it (HODL). HODL is a buy-and-hold tactic used by venture capitalists who assume that its value will rise over time if they hold an asset for an extended period. Is this, on the other hand, a profitable strategy? Yes, but only under certain conditions.
Mastering cryptocurrency investment and implementing strategies requires a lot of skill. Furthermore, conducting a thorough study necessitates an excessive amount of research time. Nevertheless, conducting research in the cryptocurrency market is now convenient and straightforward. Some of the most reliable media sites for crypto news are: Coindesk, BiteMyCoin and Cointelegraph. They will provide you with in-depth knowledge and also the latest updates affecting cryptocurrency rates.
Holding a counterfeit coin for three years and hoping for it to rise in value is a waste of money and time. As a result, it is determined by the item in question. The long term could last anywhere from one to three years in the bitcoin market. It lasts five to ten years in other financial needs, such as stocks.
This technique is suited for newcomers to the game. A large percentage of newcomers, however, prefer to trade. It’s because day-to-day trading is more exciting than waiting for the value of an investment to grow over time. A long-term strategy is, in a nutshell, time-consuming. We can, however, say that the wait was well worth it. Consider this: if you had invested $100 in Bitcoin four years ago (in January 2017), you would have made a $5,878 (5779%) profit! It’s incredible.
Is it possible, however, to make such earnings in trading? Of course, yes. Numerous market participants have already tapped into the well of wealth that virtual currencies trading provides. The trader’s success, however, is still reliant on him. To obtain a greater understanding, consider this. Assume two inexperienced investors opted to attempt their fortune in the Cryptocurrency market in January 2017. The first used the HODL strategy, while the second experimented with daily trading. The former simply believed in the price movement of cryptocurrency. He only purchased cryptocurrency, held it, and sold it when the timing was right. Four years later, the price had reached an all-time high of 68,990 USD (You can go to Coindesk to check that data). He produced a 5779 per cent revenue in a single day while using the HODL method. The question now is whether the latter is capable of accomplishing this.
Remember that the merchant is a newbie to technical analysis and needs to learn about market volatility, graph patterns, indicators, risk management, psychology, and other topics. He must also develop a appropriate trading strategy and technique for his trading style. It takes more than a few months to master. Years of trading experience are required to be effective. And we’ve all seen how challenging it is for a beginner. You might get lucky in some of the transactions, but there’s still a good chance he’ll lose in the ones after that.
What are the advantages of long-term investing? For newbies, it does away with the role of emotions. It is recommended for beginners, especially those too busy in the afternoon, to sit in front of a pc and watch the ups and downs of an asset’s value. They don’t have to think about the market when they buy and sell. They decided to keep it for the time being. This procedure has also been tested, particularly in the financial sector. Warren Buffett, one of the most well-known figures in traditional finance, believes in long-term investing. He does not conduct technical analysis before purchasing an asset. He employs the value investing strategy.
Value investing is an investment strategy that involves cautiously choosing assets that show up to be trading at a discount to their innate or book value. Value investors actively seek assets that they believe are undervalued by the market. They think that the market overreacts to both good and bad news, resulting in asset price swings that are inconsistent with a company’s long-term fundamentals. The market’s reaction offers an opportunity to profit by buying stocks at a discount—on sale.
Hodlers use this technique as well when evaluating fundamental and technical analysis. They can see a project’s possibility here, so they’ll acquire it for a low price, recognizing that its actual inherent value will emerge one day, and they’ll sell it. Anyone can do it. The advantage of the hodl method is that it applies to everyone. This method applies to anyone. They only have to research and evaluate a project’s potential before buying it and carrying it for several years.
Another advantage of using HODL is that traders get sufficient sleep. One problem that market participants face is sleep deprivation because they must constantly monitor market activity, much like snipers waiting for an opportunity to fire on the enemy. Hodlers, on the other hand, are unconcerned about daily market fluctuations. They don’t mind if their asset experiences a flash crash and drawdowns because they know it’s all part of the cycle and will pass. They
The final advantage of the HODL strategy is the low trading fees. Hodlers pay less than experienced traders, such as day traders. We can argue that the transaction fee is low, thus trading is acceptable. Whenever these small sums are added up over time, they add up to a significant amount. As a result, do not underestimate the costs. That is where the transactions thrive.
To Sum It Up
Maintain the plan that works best for you. Whether long-term or short-term, a trading plan will only work if it matches your personality. Hodling is suitable for the average person. Regardless, most hodlers have discovered that their personality is not suited to trading or unable to manage their emotions. They have shifted their focus to holding rather than trading for a living.